Daily Mail & General Trust is upbeat on advertising prospects

Internal links

Outlook

Daily Mail & General Trust, the publishing group, yesterday offered a rare upbeat assessment about the health of the UK advertising market, although it unveiled a 1.1 per cent fall in interim pre-tax profit to £71.6m.

DMGT, which publishes the Daily Mail, The Evening Standard and regional titles ­ including the Bristol Evening Post ­ said advertising revenue for the six months to March climbed 11 per cent. That helped half-year turnover grow 11 per cent to £961m.

Peter Williams, DMGT's finance director, said: "Classified advertising revenue is holding up very well, particularly recruitment. The UK economy outside of London isn't doing badly at all."

Business conditions, he noted, had been "pretty tough" for display advertising in April and May, "but we see it coming back a bit, and there are signs it will be a bit better".

Simon Baker, an analyst with SG Securities, said: "They were a mixed set of results. That April and May were tough was no surprise, but what was interesting was that forward bookings for the third quarter showed good gains."

That sentiment helped the shares recover an early 10p fall to close up 38p at 798p. DMGT has underperformed the UK media sector by 10 per cent over 12 months after hitting an all-time high of 1,323p last year.

Losses at Metro, the free tabloid distributed in London and five other metropolitan areas, fell to £4.1m from £13.2m. The London edition is profitable, and total circulation for all six titles surpassed 800,000.

Losses at internet ventures, including femail.co.uk, as well as investment costs to develop Teletext for digital TV rose 9 per cent to £18.7m. Net debt, spurred by acquisition costs of £107m, rose £70m to £855m.

A bitter circulation battle with The Express, acquired in December by the porn baron Richard Desmond, failed to dent circulation growth at the Mail, whose average daily sale grew 1.2 per cent to 2.4m. Sales of the Evening Standard, however, slid 2.5 per cent to 435,000, hurt by disruptions in commuter rail services around the capital.

DMGT's long-term incentive plan for senior management, which could see participants receive double their investment in free shares after five years, is to begin later this year, Mr Williams said. "We haven't put it into place because we have been in a closed period. The key point is that it absolutely aligns the interests of executives with shareholders."

Among executive directors, Mr Williams and Charles Sinclair, the chief executive, will be included in the scheme, as will Viscount Rothermere, the chairman, and Paul Dacre, editor in chief of The Daily Mail.